Get Summer 2014 Right First Time with tutor2u Exam Coaching & Revision Workshops
Mind the Gap! Evan Davis has produced two superb programmes on the regional imbalances in the UK economy. In the first he focuses on the agglomeration / network economies of scale that help to explain the skew in business investment towards the capital. In the second he looks at which cities elsewhere in the UK might be drivers of renewed growth of incomes, investment and growth! Here are the links:
Mind The Gap Episode 1 - click here
Mind The Gap Episode 2 - click hereread more...»
Six reasons for low business investment are advanced in this article - private sector capital spending is a key driver of growth - why have companies been reluctant to authorize investment projects despite an environment of low interest rates?
I was delighted to give a talk to A2 economists at Wilson's School in Surrey today covering some aspects of trade and development economics. In particular we looked at the work of Hidalgo and Hausmann and their newly published Index of Economic Complexity. The slides from my talk are streamed below.read more...»
The Atlas of Economic Complexity is a new book (perfect for the coffee table) from Richard Hausmann and Cesar Hidalgo. It maps out the degree of complexity of individual economies around the world and provides a hugely visual and interesting insight into the importance of knowledge in shaping the future prosperity of countries in the global economy. I have put together a 10 question quiz on some of their key results - a useful activity I hope for students interested in the commodity composition of trade of developed and developing countries. Have a go!read more...»
Inequality might be falling between nations as a global middle class is emerging, but inequality is on the rise within nations. Quite why this is happening is a matter of debate, but the International Monetary Fund (IMF) has joined in the discussion asking if rising inequality is an obstacle to economic growth and development.read more...»
Most of the commentary on the UK’s economic recovery focuses on consumers. Are they taking on too much debt again to finance their spending? Is there a bubble in house prices, as people get excited about bricks and mortar again? Certainly, in terms of its sheer size, spending by consumers is by far the biggest component of GDP, making up around 60 per cent of total domestic expenditure.read more...»
During the financial crisis, the central banks of the United States, United Kingdom and Japan created $3.7 trillion in order to buy assets and encourage investors to do the same. Michael Metcalfe from State Street argues that these same central banks print money to ensure they stay on track with their goals for global aid? Without risking inflation? A Print-Aid matching scheme could boost aid payments by up to 40% or $200 billion.read more...»
In Germany the government has reluctantly agreed to introduce a minimum wage of €8.50 (£6.98) per hour. Angela Merkel's conservative Christian Democratic Union party is opposed to the idea, but need to make concessions in coalition negotiations with centre-left parties such as the Social Democrats, who have campaigned for a national minimum wage.read more...»
In this independent research assignment, Year 12 Economist Doug Feagin considers some of the factors influencing the macroeconomic performance of Mexico - a fascinating country and one of the MINT cluster of countries discussed by Jim O'Neill in his recent programmes for the BBC.read more...»
Economics coverage of Africa can be a bit bleak (though perhaps it shouldn't be, with incomes rising rapidly in parts of Africa). There are often bad news stories, particularly in terms of human development indicators. News of economic progress often centres on the exploitation of primary commodities, with all the risks and issues that presents.
If you hope Africa will experience development, you’re likely to want to see sustained and robust economic growth. That, in turn, will require industrialization.read more...»
A selection of video resources for students and teachers interested in Keynesian economicsread more...»
A selection of video resources for students and teachers interested in Keynesian economicsread more...»
In the 1990s and early 2000s, Germany was seen by many as the new ‘Sick Man of Europe’. Between 1991 and 2005, GDP growth averaged only 1.2 per cent a year, compared to 3.3 per cent in the UK. Since then, the German economy has revived dramatically. The recovery in the German cluster of economies from the financial crisis has been as strong as in the United States, with the previous peak level of output being regained in 2011. Germany itself experienced virtually no increase in unemployment in 2008 and 2009, its exports are at record levels, and even the crisis in the Euro area has not prevented expansion in both output and employment.read more...»
Robert Peston looks at the astonishing investment in urban infrastructure in China in recent years - 30 new airports, 26,000 miles of motorways and a new skyscraper every five days have been built in China in the last five years - required viewing for those interested in a key aspect of Chinese economic growth and development. Link to How China Ruled the World (BBC World)read more...»
Here are some links relevant to the June 2014 pre-release case study on economic prospects and challenges for the countries of sub Saharan Africa.
The IMF expects seven of the world’s fastest growing countries during the next five years will be in Sub-Saharan Africa – Congo, Ethiopia, Ghana, Mozambique, Nigeria, Tanzania, and Zambia.read more...»
Gains from international trade, the history of European economic integration, fiscal and monetary policy, the launch of the €uro and the 2008 financial crisis are all clearly animated and explained in this superb video. In just over 12 minutes it explains the problems of the €urozone and the threats and challenges it still faces. Definitely one to watch for the closing stages of an A2 macro course.read more...»
A new World Bank report looks at the growing scale and scope of welfare safety nets in a number of countries in sub Saharan Africa. We tend to take entitlement and access to welfare provision for granted in high income countries. What contribution can a welfare system make to promoting inclusive growth and development. Here is the World Bank's slideshow and follow this link for their latest research papers on the topic.read more...»
He might have only had his feet under the Governor's desk for 8 months but BOE Governor Carney has announced changes to the role of the MPC for a second time as forward guidance has been overhauled.
You all know about exploding rates of urbanisation and the growth of mega cities. There’s much to celebrate in this trend, and economists are keen to advise countries how to urbanise successfully.
After all, for most subsistence farmers, life can be so grim that even life in a slum or shanty town can be a marked improvement. I’ve reluctantly admitted this fact to myself, and come to see slums as a stepping stone on the process of development.
A new study, reported in the Economist, suggests I might be wrong, and that we shouldn’t be ready to tolerate slums, and should be more determined to see their eradication – they might even be a barrier to development.read more...»
Forward Guidance Mark II began yesterday as the Forward Guidance Mark I didn't really go as planned, approaching the 7% threshold for unemployment way too quickly for the BoE's comfort. The following video clips discuss some of the issues from yesterday's announcement. Big debate about whether the new Forward Guidance is more fuzzy than it is forward.read more...»
Sometimes it’s worth challenging a concept that is fundamental to Economics, such as specialisation or the theory of comparative advantage (video here). This crucial theory views international trade as profitable even for a country that can produce every commodity more cheaply than any other country (an absolute advantage). According to Robert Skidelsky, the textbook example is that of a town’s best lawyer who is also its best typist. Provided that she is better at law than at typing, she should specialize in law and leave her secretary to do the typing. That way, both of their earnings will be higher. The same logic applies to countries. Each country should specialize in producing those things that it produces most efficiently, rather than producing a bit of everything, because that way its income will be higher.
Why does Skidelsky go on to challenge that view?read more...»
Here are some revision questions on economic growth designed as a short revision quiz for A2 macro students - have a go!read more...»
Here is a ten question matching-pair quiz covering aspects of development economics - a short revision quiz for A2 macro students created using the free software available from Zondle. Have a go!read more...»
David Smith's weekly column in the Sunday Times yesterday is worth getting hold of, to study the conundrum around stagnant productivity and rising employment. He uses data from the ONS to look at average weekly real wages, which started falling in 2008 and are still falling now, to consider whether this year will show a turnaround in real incomes.read more...»
Norway has for many years recorded an enviable macroeconomic performance. It regularly tops the international rankings for the Human Development Index (HDI) and it has one of the highest figures for GNI per capita (PPP) among developed nations. It records huge current account surpluses in excess of 10% of GDP each year and strong growth and surging revenues from oil and gas production have given the Norwegian government a fiscal position that many other countries would die for! Unemployment is the lowest of any European country.
That said there are some signs that the economy is suffering from an over-dependence on oil and gas - it is at risk of the Dutch Disease?
The Dutch Disease is the idea that economic growth from exploiting and exporting natural resources can crowd out investment in other sectors, in part due to a strengthening exchange rate which causes a sharp rise in relative unit labour costs. High wages are also seen as a factor behind a trend decline in the average hours worked and a rise in the drop-out rate from high school education.
Manufacturing wages in Norway have climbed by more than 150 per cent since 1997 against just 50 per cent in the US and Germany They are now 60-70 per cent higher than the weighted average of Norway’s trading partners, meaning “that for every hour worked here we need to be 60 per cent more productive”. (FT, 7 Feb 2014)read more...»
Cost benefit analysis, economies of scale, energy economics, regional development, economic growth, competitiveness ... there is a veritable a tidal wave of applied economics in this article from the Guardian on plans for Tidal Lagoon Power.
This is a superb article from the Economist for A2 macro students wanting to understand more about the fragility of a large cluster of emerging economies.read more...»
Celebrations in Ireland as the credit ratings agencies no longer regard Irish government debt as ‘junk’, according to the BBC. What does this mean and why does it matter? Here are some bond market reminders and links, helping to explain how governments borrow, and at what cost.read more...»
Natural resource economics are applied in this new World Bank blog to the Eurasian region - plenty of overlap with your studies on the issue in the context of sub Saharan Africa and other parts of the world. Click here for the blog article.
Click here for a blog article on the natural resource curse from Graham Watson (2012)
Our streamed revision presentation on the topic is belowread more...»
The BBC Africa Report looks at the importance of largely French funded infrastructure projects as a driver of growth and development in the Ivory Coast. But the economy is becoming more open to investors from other countries. Some of this investment may come from Japan - read this article
Related article - focusing on the mining boom in the Ivory Coast - Ivory Coast hopes for golden future as mining sector opened upread more...»
A great introduction to some global or development economics, looking at the world’s biggest problems, as measured by their cost to the world’s economy. There’s commentary and a good stimulus video. It will add a dimension to your introduction to global challenges, even if you’re already familiar with the basic Copenhagen Consensus idea: prioritise the world’s problems from biggest to smallest. That approach should lead to a more efficient response, given that resources – and political will – are limited.read more...»
We have spent a little time in our A2 economics lessons this week looking at some of the challenges facing the Indian economy. Growth is slowing, inflation is persistently high, interest rates are rising and the Indian current account deficit on the balance of payments is widening. The economy faces many challenges and pressures for better government and structural economic reform are growing. I have linked below to some of the charts we used in our discussions and note-taking.read more...»
Much has been made of Latvia's internal devaluation, so much so that it has featured in OCR's Global Economy pre release. Most commentators have reacted negatively to the effect of Latvia's internal devaluation; here's why:read more...»
As the comedian Mark Steel once said, “anybody who says we’re all middle class now obviously hasn’t been to Wigan” (I can make that joke because my dad’s from there). One huge global cause for celebration is that the scourge of absolute poverty is in retreat. Instead we hear much more about rising inequality within nations, which is progress, of a sort. In amongst these discussions is talk of a rising new middle class (see above – link here). What might this mean?read more...»
In this short interview from the Financial Times, John Authers discusses with Roger Bootle, managing director of Capital Economics about the sources of the resurgence in growth in the UK economy. Bootle argues that there is little sign of economic re-balancing, consumption is the main driver of recovery and net exports are subtracting from growth at the moment.
The current account deficit is widening - Bootle find this a deeply depressing shift and hints that the UK economy remains heavily dependent on exporting to weak-growing European markets.read more...»
New data on the UK economy shows another quarter of above trend growth. Here is an updated six chart presentation on the economic cycle that might be useful for teaching macro in the classroom. Download as a powerpoint fileread more...»
My A2 macro students are now looking at some fascinating macro policy challenges facing a range of countries. This week they choose one from two set assignments.
The first offers them an opportunity to analyse some of the causes of high inflation in India and consider how much of a threat it is to India's continued growth and development.
A second assignment looks at Abenomics in Japan and whether it can lift the Japanese economy out of over two decades of slow growth and deflationary pressures. I am hoping that there will be some interesting insights allied to good A2 macro analysis as students crack on with their independent research.
Download the assignment sheet below and I have added in some suggestions for further reading on the two topicsread more...»
Geoff's superb support resource for OCR F585 June 2014 is now ready. We have just sent out the resource to all the teaching colleagues who kindly pre-ordered the F585 toolkit. Apologies for the delay in sending it out (a couple of weeks later than planned). But, when you see the resource I'm sure you'll feel it was worth the extra few days. The F585 June 2014 is a real tour-de-force,providing unrivalled commentary and analysis for students as they work their way through the exhibits in the stimulus material.read more...»
BBC2 are showing a documentary about the massive growth of the coffee industry in Vietnam at 8.00pm tonight - if you miss it, it will be repeated on Monday 3 Feb at 23.30, and also available on i-player. It looks as if it will provide some excellent examples of agricultural strategies to promote development, as well as constraints on that development.
I have asked my students to read this article from the BBC News Magazine which summarises some of the programme, and to look at this summary of the World Bank's development report produced last summer.read more...»
Notes from a talk given by Ricardo Fuentes-Nieva (Head of Research at Oxfam) at the Marshall Society Economics Conference in Cambridge in January 2014read more...»
Notes taken from the Marshall Society Economics Conference - this panel session focused on growth and development issues in South Korea and sub Saharan Africaread more...»
Here are some notes taken from a talk given by Peter Coy, Economics Editor for Bloomberg Businessweek, at the Marshall Society Economics Conference in Cambridge in January 2015read more...»
Notes from a talk given by Liu Xiaoming, Chinese ambassador to the UK at the Marshall Society economics conference in Cambridge in January 2014.read more...»
Inside Story from Al Jazeerah considers whether the worst is now over for some of the cluster of Euro Area countries who have received huge bail-outs accompanied by fiscal austerity measures. The Spanish economy seems to be moving tentatively towards a stronger rebound despite persistently high mass unemployment.read more...»
Capping seems to be all the rage at the moment. We read of capping electricity and gas prices, capping welfare payments for families ... and now a proposed cap on bonuses for bankers is being put forward by the EU and by the Labour Party.
In this article, Tim Harford cuts to the chase and highlights the contradictions in the EU blanket policy on capping bankers' bonuses. It is a good example of a policy where the unintended consequences include the probably that banking salaries would rise still further.
Under the EU proposal, a cap on rewards would limit payouts to banking executives to annual pay - or twice that only if shareholders approve.
BBC Hard Talk: Adair Turner on the effect of a bonus cap on bank salariesread more...»
Successful innovation is a driving dynamic of competitive businesses and countries. Bloomberg Rankings recently examined 215 countries and sovereign regions to determine their innovation quotient. They have narrowed this down to thirty countries and the results are available through this Bloomberg slideshow. Which nation comes first?read more...»
The Secretary of State Vince Cable delivers a lecture on the UK economy at the Bank of England on Monday 27th January starting at 6.30pm. I will be there on behalf of Tutor2u and I will post a report on his talk on this blog entry as soon as possible after the talk.
The Rt Hon Dr Vince Cable MP, Secretary of State for Business, Innovation and Skills will be talking on ‘The shape of the economic recovery’ on Monday 27th January at the Bank of England Conference Centre. The RES is widening the outreach of its policy lectures by broadcasting the lecture live in HD video and encouraging participation and interactivity through this site.
The hashtag for the event is #reslecture
Here are some news clips on the sharp fall in measured unemployment and a record rise in employment in the UK economy at the end of 2013. Students can find revision notes on unemployment using this linkread more...»
It was no surprise when the latest release of unemployment and employment data for the UK labour market up to the end of 2013 made headline news across the media. There was a dramatic decline in the labour force survey measure of unemployment and news of a record level of employment.
Many teachers will be covering unemployment as part of their AS macro course - I have put together six updated charts into a PowerPoint file for those who want to integrate the data charts into their teaching. Download using the link below:
PowerPoint file on Unemployment
The concept of the’ output gap’ is central to mainstream macroeconomics. It is not merely of academic interest. The Office for Budget Responsibility (OBR) has a specific requirement to estimate the output gap, which it defines formally as “the difference between the current level of activity in the economy and the potential level it could sustain while keeping inflation stable”. The output gap is a key consideration for central banks around the world. If output is well below its potential, interest rates should be kept low, to try to stimulate the economy. And a large output gap should keep inflation low. Prices are hard to put up in a depressed economy.read more...»